This archive report was first published on 24 November 2019.
Published on November 24, 2019, by Adema Sangale, a managing partner at C. Suite Africa, a boutique management consultancy.
Why do some countries thrive while others struggle? The answer lies not in education or labor, but in the collective knowledge and skills of their people.
According to Ricardo Hausmann, a renowned Venezuelan economist, the key to a country's prosperity lies in its 'know-how' – the tacit knowledge and skills that are not easily transferable.
Using the analogy of Scrabble, Hausmann explains that a country's collective know-how is like a set of tiles, each representing a unique skill or piece of knowledge. The more tiles a country has, the more diverse and complex its products can be.
Germany, for instance, is the Scrabble world champion, with a vast array of skills and knowledge that enable it to produce everything from clothes to aircraft.
But how do countries acquire these skills and knowledge? Hausmann argues that it's not just about formal education, but about learning hands-on skills and acquiring tacit knowledge through experience and practice.
He also emphasizes the importance of knowledge clusters, where people with similar skills and interests come together to share ideas and learn from each other.
Take, for example, the success of the Bangladesh textile industry, which was sparked by Bangladeshis who returned from working in South Korea with new skills and knowledge.
So, what can we learn from these lessons? Hausmann suggests that we should focus on developing our capabilities and intuitive knowledge, rather than just relying on formal education or labor.
He also emphasizes the importance of 'love thy neighbors,' and learning from other countries and cultures.
Ultimately, the key to prosperity lies in our ability to acquire and share knowledge, and to develop our collective know-how.
